The open season for the Thrift Savings Plan ends Thursday, and with it federal employees' opportunity to change the amount of money they invest each pay period in the plan's funds.
For some high-ranking civil servants, this could be a chance to make an extra couple hundred dollars.
Under the TSP, federal employees decide how much money from each paycheck they want to have withheld and invested in the plan. The maximum amount allowed each year is determined by the IRS because TSP investments are tax-deferred. This year's maximum is $9,500.
In addition, agencies contribute money to employees' TSP accounts. The agency contributions are based on the first five percent of basic pay employees contribute to the TSP--the agency matches the first three percent dollar for dollar and matches 50 cents on each dollar for the next two percent.
Thus, employees can maximize their agency contributions by making sure they set aside at least 5 percent of every pay check for the TSP.
The problem this year is that many employees may not have factored in the fact that there will be 27 pay periods in 1997, which means they may be shortchanging themselves up to a few hundred dollars. This would most affect employees who make above $95,000 because they can contribute the maximum contribution of $9,500.
During the open season, employees can change how much they want withheld from each pay check for the TSP. To take full advantage of agency contributions to the TSP, employees need to spread out their deductions over all the pay periods, including the extra one this year.
The most agencies contribute per pay period, for the highest-paid civil servants, is about $200.
To figure out how much money you should allot to the TSP each pay period to maximize agency contributions, download this worksheet. You'll need Adobe Acrobat Reader.
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